How to Get Rich This Holiday Season! Ep 638

In this episode, Alex shares strategic insights on maximizing holiday sales through various marketing tactics. He introduces the concept of a loss leader to attract customers with discounted staple items, like diapers, and then upsell on high-margin products. Alex discusses leveraging gift cards as a low-redemption, high-profit item, encouraging customer referrals by offering discounted gift cards as gifts. He also details a high-ticket scarcity strategy, creating a sense of urgency for premium services, and a 'free with prepay' approach, where customers pay upfront for a service and receive additional value for free. Throughout, Alex emphasizes the importance of presentation and packaging these offers attractively, using his MAGIC acronym—Magnetic reason, Avatar targeting, Goal outcome, Interval timing, and Container word—to effectively market and sell during the lucrative holiday season.

• Businesses often adapt their presentation during the holidays without changing the core of their operations.
• Wealthy individuals view business as a game, and the podcast aims to share lessons learned on the way to building a successful portfolio.
• The holiday season is a prime time for businesses to increase their earnings, with many making the most money in December.

"You're not going to change your entire business for the holidays to make something sound different, but you can make it look different based on how you present it."

This quote emphasizes the importance of presentation during the holiday season without fundamentally altering the business.

• A loss leader is a well-understood product sold at a loss to attract customers.
• The strategy involves selling a common product, like diapers, at a price below market value to draw in customers.
• Ancillary products, such as baby bottles, are where businesses can make a higher profit margin.
• The loss on the leader product is offset by profits from additional purchases made by customers.

"A loss leader is basically where you sell a very well understood product and you sell it for less than the market understands the prices for."

This quote defines the concept of a loss leader and sets the stage for its application in holiday marketing.

• Businesses should analyze their product or service stack to identify potential loss leaders.
• Offering a significant discount on one aspect of a service, such as accountability in a fitness program, can entice customers.
• The discounted offer draws customers in, who then purchase additional products or services at full price.

"How do you use this for a holiday promotion? What you want to do is you want to look at your product stack."

This quote suggests analyzing the business's offerings to identify which ones can be effectively used as loss leaders in a holiday promotion.

• Splintering an offer involves separating components of a product or service and heavily discounting one part.
• The discounted component serves as a promotional tool to attract leads, with the expectation of upselling other components.
• The ultimate goal is to make up for any loss incurred from the discount through increased overall sales.

"Put it into an itemized list of all the things you could potentially market or advertise, and then you peel off one of them, I call it splintering your offer, and then you make an insane discount around one of those pieces."

This quote explains the process of splintering an offer to create an attractive discount for holiday shoppers.

• Holiday promotions are crucial because of the increased consumer spending during the final month of the year.
• Businesses should capitalize on the natural inclination of people to spend more during the holidays by increasing advertising and sales efforts.

"Most businesses make more money in the last month of the year, and that's for two reasons. One, because they advertise more, and two, because people want to spend."

This quote highlights the two main reasons why businesses typically earn more during the holiday season: increased advertising and consumer willingness to spend.

• Gift cards are a highly profitable item for businesses, particularly during the holidays.
• Companies benefit from low redemption rates, as many gift cards go unused, effectively providing the business with a cash loan.

"Gift cards are one of the most lucrative things that you can sell in general."

This quote underscores the profitability of gift cards, making them an attractive item for businesses to sell during holiday promotions.

• The strategy involves offering gift cards equivalent to one service unit at a significant discount.
• Market the discounted gift cards to existing customers as gifts for their friends and family.
• Limit the offer to two gift cards per customer to increase perceived value.
• The promotion aims to attract new customers through referrals, who are considered high-quality leads.
• Collect contact information for follow-up and potential upselling during redemption.
• The final step is to upsell the gift card recipients on more expensive services or products.

"You offer $200 gift cards to your services. One purchase worth of services." This quote outlines the initial step of the gift card strategy, setting the value of the gift card to match the cost of one unit of service.

"This is a $200 gift card, but I'm selling it for 90% off or 80% off, whatever you want." The speaker is describing the discount offered on the gift card to make the promotion more attractive and attention-grabbing.

"Only as gifts for friends and family." The gift cards are intended to be used as referrals, which means they cannot be used by the purchaser, thereby ensuring new customer acquisition.

"You're going to get paid to get new customers, and you would probably give the services away for free anyways to get a customer." This quote highlights the financial benefit of the strategy, where businesses effectively get paid for what they might otherwise offer for free to acquire new customers.

"These are the highest quality customers because they're referrals." The speaker emphasizes the value of referral customers, who tend to be more loyal and have a higher conversion rate.

"You can double a client base because you can get every single person to bring not one, but two." The limitation of two gift cards per customer is a tactic to potentially double the client base.

"Ask them who they're going to give it to and get the contact information." The strategy includes collecting leads for follow-up, increasing the chances of redeeming the gift cards and fostering new customer relationships.

"You could turn these into $800 sales." The final step involves upselling the gift card recipients to higher-priced offerings, maximizing revenue potential.

• The strategy focuses on creating an exclusive, high-end version of a service or product.
• Determine what an ultimate version of the service could be, priced at a much higher rate.
• Limit the offer to a small percentage of the customer base to create scarcity.
• The goal is to attract a segment of customers willing to pay for a premium, transformative experience.

"What would the ultimate version of this be like? Ten times or 50 times as expensive as what I've normally charged?" This quote introduces the high ticket strategy's concept of creating an exclusive, premium-priced version of a service.

"I'm going to limit this promotion to 5% of my customer base." The speaker is explaining how limiting the promotion to a small percentage of customers creates a sense of scarcity and exclusivity.

"This is the ten x to 50 or 100 x of your normal price with a massive scarcity." The quote emphasizes the significant price increase for the premium service and the importance of scarcity in making the offer more desirable.

"You say, hey, I'm doing this personal program that you're going to get more service." The speaker suggests using the high ticket strategy to offer a more personalized and enhanced service to a select group of customers.

• The strategy involves initially setting a low percentage for premium offers to ensure sell-out and increasing it in subsequent years.
• The pricing model is based on the 80/20 principle, where a small percentage of customers contribute to a significant portion of revenue.
• This model identifies customers who are willing to spend more and targets them with scarce, high-value offers.
• By selling a small number of expensive packages to these high-spending customers, a business can significantly boost its revenue.
• The strategy includes building hype and creating a sense of urgency and scarcity through advertising and real-time updates on availability.

"And then next year you can bump it to 6%, 7%."

This quote suggests gradually increasing the premium offer percentage after the initial sell-out, indicating a strategy to grow revenue progressively.

"20% of customers will spend five times more than 80%."

This quote explains the Pareto Principle (80/20 rule) applied to customer spending habits, highlighting that a small fraction of customers account for a large portion of sales.

"The key to making this work, you build lots of hype around it before the holidays."

This quote emphasizes the importance of marketing and creating anticipation for the high-value offer to ensure its success.

• This strategy encourages customers to make a purchase by offering additional items or services for free when they prepay.
• It is particularly effective during the holiday season or special occasions.
• The success of the strategy depends on how attractive the free offer is compared to the initial purchase.
• The perceived value of the free items can drive customer behavior even if the price of the initial item is increased.
• This strategy can be applied to both physical products and services but should not be overused to avoid customer dependency.

"The key to this is how insane you make the free thing."

This quote highlights the importance of making the free offer highly appealing to customers to drive sales.

"Buy one, get two free. And it was pairs of boots."

This quote provides an example of the strategy in action, showing how a business successfully used the offer to attract customers.

"But the perception of how much more compelling get one to get more free than what you paid for is the thing that drives the buying behavior."

This quote explains that the customer's perception of getting a deal is a powerful motivator for making a purchase.

• Cash flow is a critical factor in promotional strategies, particularly for service-based businesses.
• Prepaying allows businesses to collect cash upfront, which is advantageous compared to waiting for recurring payments.
• Offering significant discounts for upfront payment can be appealing to customers but requires that customers pay the full amount immediately to lock in the discount.

"And the reason it's so strong is because all the cash is front loaded."

This quote explains the financial benefit of receiving all the money at the start of the promotional period, which can improve a business's cash flow.

"They can't lock in the price and then say, can I make a payment plan on your discounted services?"

This quote emphasizes that to benefit from the discount, customers must pay in full upfront, reinforcing the cash flow advantage for the business.

• Limiting quantity is a strategy to create scarcity and drive sales.
• Recommended for holiday promotions to secure immediate revenue without risking the business.
• Can be used as a grand opening strategy to cash flow the opening of a facility.
• Offer a limited number to early customers (e.g., first 50 sign-ups) with a compelling deal (e.g., buy six, get six).
• Control over pricing and service is crucial to the success of this strategy.

You can drive even more scarcity by limiting quantity.

This quote emphasizes the importance of creating scarcity by limiting the quantity of the product or service offered to increase demand and urgency among potential customers.

• Setting a higher price for a promotion by adding extra services that are low-cost but add perceived value.
• Differentiate the promotional offer from the standard service to prevent dissatisfaction among customers paying the regular price.
• The strategy involves increasing the price and adding one or two additional services to justify the increased cost.

So what we'll do is we can bump this price, let's say, to $200 a month for this promotion.

This quote explains the tactic of raising the price for a promotional offer, which is then justified by adding extra services that are not included in the standard pricing.

• Using a "buy x, get y free" promotion to drive sales and cash flow.
• The offer can be structured in various ways, such as "buy six, get six" or "buy four, get eight."
• Limiting the number of customers who can take advantage of the offer to increase exclusivity and demand.
• This type of promotion is effective year-round but particularly powerful during the holiday season.

And then you can limit it by saying no more than x can buy.

This quote highlights the strategy of setting a cap on the number of customers who can participate in the promotion to maintain exclusivity and increase the offer's perceived value.

• The acronym 'MAGIC' stands for a series of elements to effectively wrap and present offers.
• 'M' for Magnetic Reason Why: Justify the offer with a compelling reason, such as the holiday season.
• 'A' for Avatar: Specify the target audience for the offer.
• 'G' for Goal: Define the ultimate outcome or dream that the offer helps the customer achieve.
• 'I' for Interval: Set a timeframe for when the customer can achieve the goal.
• 'C' for Container Word: Use a word to bundle the offer into an attractive package.

M is a magnetic reason why. A is the avatar, is that you actually want to say who you're targeting. G is for goal is what's the ultimate outcome you want the person to experience. I is for a time interval which basically just says, when is this person going to get this goal? And then c is something that I call the container word.

This quote outlines the MAGIC acronym and explains each component's role in creating an attractive and targeted offer that resonates with the intended audience and encourages them to purchase.

• The MAGIC strategy can be applied to various types of promotions to enhance their appeal.
• By using the MAGIC elements, businesses can create targeted offers that speak directly to the desired customer base.
• The strategy helps in naming and marketing the promotion to increase its effectiveness and sales potential.

So just like that, we can create our busy mom's 30 day relaxation getaway for the holidays.

This quote demonstrates how to apply the MAGIC strategy to a specific offer, creating a targeted and attractive promotion that resonates with the intended audience, in this case, busy moms seeking relaxation during the holidays.